Giving Golden Arches Global Span
INTERVIEW: JAMES CANTALUPO
OAK BROOK, ILL.
A JAPANESE manager with McDonald's Corporation brought his family on a visit to Los Angeles. Spying a pair of golden arches, his young son exclaimed: "They even have McDonald's in the United States!" That reaction might startle Americans, for whom the burger behemoth has acquired national icon status by virtue of its ubiquity and mass appeal. At year-end the fast-food chain had spread to 8,576 US locations - one per 28,000 inhabitants.Skip to next paragraph
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All this started with the drive-up (featuring red arches, by the way) that founder Ray Kroc opened in 1955 in Des Plaines, Ill.
When business outgrew that site in the late 1970s, public clamor prompted McDonald's to preserve it as an architectural landmark. America's landscape isn't the only one dominated by the world's largest food service company, as the Japanese boy's remark shows. McDonald's has established nearly 800 stores in Japan since starting there 20 years ago. Now the country's leading meal-server, the chain appears on its way to icon status there, too.
That's fine with James Cantalupo, president of McDonald's International. He says the company aims to "become as much as part of the local culture as possible" as it moves to exploit the lucrative, barely penetrated global market. Results from 1990 demonstrate the potential. International sales grew 27 percent. And with just a quarter of McDonald's 11,803 restaurants last year, international sales contributed over 80 percent of the $1.5 billion total growth in sales, which rose to $18.8 billion.
McDonald's "is not just a ham-burger. It's an experience ... that people want all over the world," Mr. Cantalupo says.
Indeed, revenue abroad averages around 50 percent higher per store than in the more heavily saturated and highly competitive US market, where also a recession is keeping disposable income in consumers' pockets. McDonald's is bracing for a difficult 1991 at home.
The company will continue to open one to two stores a day, with the non-US market gaining in percentage. In 1987 just four in 10 new openings were abroad, against half of last year's 641 new restaurants. Cantalupo sees international openings climbing to 60 percent and more of the total.
"Our potential is huge," Cantalupo says. East and West Europe plus the Soviet Union have three times the population of the US. Then there's Asia and Latin America. "There's not a country out there that I don't see us making a viable, long-term, profitable business in.
"We just set up an office in Vienna to deal with Eastern Europe. We're working on Czechoslovakia and Poland right now, and then we'll move on to the other ones."
Currently McDonald's operates in 53 countries, largely in Europe, the Pacific, and Latin America. Cantalupo expects to open in two to four new countries each year.
Morocco will be the company's first step onto the African continent, while restaurant openings in Portugal and Greece will extend the burger chain throughout the European Community.
The war with Iraq has pushed the Middle East to the back burner.